Import tariffs’ influence on sourcing strategies – European battery and energy storage companies under the USA-China trade conflict

Abstract

Recent trade disruptions have guided companies to adapt their sourcing strategies. This is because disruptions can have a significant influence on a company’s profitability. Growing tensions between countries, trade wars, and the resulting tariffs have forced companies to evaluate their sourcing. This has become increasingly topical during the US-China trade war that saw the US raise the import tariffs on many sectors, especially towards China. Previous literature examines trade disruptions and tariff adjustments, but limited research has been carried out on factors affecting these adjustments or on European companies, rather than companies from the US or China. Therefore, this study aims to fill this research gap by answering the research question of how companies are adjusting their sourcing strategies in the battery and energy storage industry in relation to the US import tariffs.

The methodology chosen for this research was a qualitative case study using an abductive thematic approach. A qualitative approach is well suited to answering “how” questions and to finding new insights of the topic from the perspective of the participants. A case study allows for the study of the current phenomenon in its real-life context. The case in this thesis is the battery and energy storage industry during the US import tariffs, especially on China. The data is collected through semi-structured thematic interviews with sourcing specialists from the companies in the field, as well as industry specialists and a trade specialist. The research was conducted abductively, with previous literature guiding the topic formation and the interview structure, participants' voices guiding the interviews, and the data analysis, and both being compared in the discussions. Iteration was pursued by including further previous theory into the literature chapter based on the findings from the analysed data.

This research contributes to the existing literature by increasing the understanding of the factors affecting sourcing adjustments and how companies are adjusting in relation to tariffs. The findings increase our understanding of uncertainty affecting sourcing strategies, and both short- and long-term adjustments, the view of product and supply risk as limiting factors are deepened. Geopolitics is defined as a limiting factor and so is non-tariff drivers, which often outweigh tariffs when adjusting sourcing strategies. Managerial implications are limited by uncertainty, but some long- and short-term options are still available, such as diversification. Companies should consider also non-tariff drivers when adjusting their sourcing strategies. The limitations of the study include its small sample size and its industry- and company-specific context. Further, more comprehensive research into the topic is encouraged.